Jurisdiction of the month: Bahamas

2015 01 22 | Category: News

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Geography, Population, Languages

The Bahamas are a group of about 700 low-lying islands and 2,300 coral reefs scattered over 250,000 sq. km in the Atlantic Ocean, in the West Indies, to the east of Palm Beach, Florida and to the north of Haiti and Cuba. The three largest islands are Andros (with an area of 6,000 sq. km), Abaco (1,685 sq. km), and Inaguas (1,554 sq. km). The capital city, Nassau, is on New Providence Island, which has an area of 215 sq. km. The second largest city, Freeport, is on Grand Bahama Island, with an area of 1,370 sq. km. It is less than 60 km from Miami. The climate is tropical, with an average temperature of 21-24 °C. Hurricanes are frequent. Only 20 islands are inhabited, the rest are uninhabited because of the lack of fresh water.

The population of the Bahamas is approximately 350,000. The most densely populated islands are New Providence and Grand Bahama. The Bahamas’ official language is English.

History, Political Structure and Law

San Salvador, one of the Bahamas Islands, was the first of the New World islands to be discovered, by Columbus, on 12 October 1492. In 1640 a group of Englishmen who sailed from Bermuda were the first to settle on the Bahamas. The Bahamas have had a representative form of Government since the 17th century, thus they are the oldest democracy in the Western Hemisphere. Before 1973 the Islands were a British dependency.

The country has been an independent member of the British Commonwealth since 1973 and the political and legal system is very close to that of the UK. A Governor General appointed by the British Government is responsible for defence, foreign affairs and internal security. The Government is run by an elected Prime Minister, who consults with a sixteen-member Cabinet of twelve Cabinet Ministers and four Ministers of State chosen from the Legislature. The bicameral legislature has a 49-member House of Assembly and a 16-member Senate. The dominant political party is the Progressive Liberal Party. There is also the party of the Free National Movement, and the Labour Party.

The Bahamas employ both Statute Law and Common Law, both based on English Common Law.

Economy and Infrastructure

The economy is based on the tourist industry (60 per cent of State income), financial services and trade activity. Agriculture is not highly developed. The Bahamas possess excellent telecommunication services. There is direct dialling to the most of the world. There are also excellent postal and courier services.

The Bahamas boast convenient flight links to major international air routes.

There is an excellent range of international banks on the Islands, with 396 banks currently holding licences under the Banks and Trust Companies Regulations Act 1965. Confidentiality is protected by the English Common Law Duty of Confidentiality.

The currency is the Bahamian Dollar which is on a par with the US Dollar. Residents are subject to Exchange Control, while International Business Companies (IBCs) are exempted.

Company Incorporation

The type of company used for international trade and investment is called an International Business Company (IBC).

The principal Company legislation is the International Business Companies (IBC) Act 2000 (as amended). New companies can be quickly and easily incorporated for the purpose of transacting offshore business. An IBC has all the powers of a natural person. The language of legislation and corporate documents is English.
IBCs are subject to the following restrictions on trading and business activities:
• An IBC cannot trade within the Bahamas or own real estate there;
• The businesses of banking, insurance, assurance, reinsurance, fund management, collective investment schemes, trust management, trusteeship, the rendering of investment advice or any other activity that would suggest an association with the banking or insurance industries are not permitted;
• A Company cannot sell its own shares or solicit funds from the public.

Incorporation procedure is as follows: a Registered Agent prepares the Memorandum of Association signed by two subscribers and submitted to the Registry. The Articles of Association can either be filed at the same time as the Memorandum of Association or within 30 days of the date of incorporation. A Company must maintain a registered office address within the Bahamas and appoint a Bahamian resident as registered agent. There is a Common Law duty on professionals to keep the affairs of their clients confidential.

In the Bahamas off-the-shelf companies are available.

IBC names are subject to the following requirements and restrictions:
• A Company name can be in any language that uses the Latin alphabet. The Registrar may require an English translation.
• A Company is not permitted to use a name that has already been incorporated, or a name that could cause confusion.
• The words “Royal” or “Imperial” are not acceptable.
• Any name that suggests the patronage of the Bahamian Government is not permitted.
• Consent or a licence is required if a Company name contains any of the following words in English or any other language: Bank, Building Society, Savings, Loans, Insurance, Assurance, Reinsurance, Fund Management, Investment Fund, Trust, Trustees, Chamber of Commerce, University, Municipal, or any name that may suggest association with the banking or insurance industries.
• Limited, Corporation, Incorporated, Societe Anonyme, Sociedad Anonima, Gesellschaft mit beschrankter Haftung, or abbreviations thereof are the required suffixes denoting limited liability.

IBCs must have a minimum of one director; corporate directors are permitted. Directors may be of any nationality and there is no requirement for them to be resident in the Bahamas. There is no specific requirement to appoint a company secretary, but there normally is one. A minimum of one shareholder is required. No details of the directors or shareholders appear on the public files, but a register of shareholders must be kept at the registered office address of the company in the Bahamas.

The normal authorised share capital is US$ 5,000, divided into 5,000 shares. This is the maximum capital to qualify for the minimum duty payable at the time of incorporation and the maximum authorised share capital for the minimum annual licence fee. The minimum issued share capital is either two shares without par value or two shares with par value. The share capital may be expressed in any currency. The following types of shares are permitted: registered shares; shares without par value; preference shares; redeemable shares; shares with or without voting rights.

Annual Taxation and Fees

There is no direct taxation in the form of income tax, capital gains tax, tax on gifts or inheritance tax. The Bahamas are not a party to any double tax treaties. The Bahamas do though have agreements with a number of countries covering mutual assistance in cases of drug trafficking.

The licence fees depend on a company’s share capital:
• Companies with an authorised share capital with a nominal value of up to US$ 50,000 pay the sum of US$ 350 per year.
• Companies with a share capital of more than US$ 50,001 must pay a fee of US$ 1,000 per year.
A penalty of up to 50% of the annual licence fee is incurred if the licence fee is not paid when due. There is no requirement to file financial statements and an annual return or audited accounts with the authorities, but a company must keep financial records reflecting its financial state.

EditorJurisdiction of the month: Bahamas